EPIS, INC. v. FIDELITY AND GUAR. LIFE INS.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING
PLAINTIFF'S MOTION FOR LEAVE TO AMEND

Currently before the Court are defendant's motion for summary judgment
and plaintiffs motion for leave to amend the complaint. Having considered
the arguments of counsel and the papers submitted, the Court hereby
GRANTS defendant's motion and DENIES plaintiff's motion.

BACKGROUND

On March 20, 2000, plaintiff EPIS, Inc., d/b/a EPIS Insurance Services
("EPIS") filed a state court action against Fidelity and Guaranty Life
Insurance Company ("F & G"), Innovative Marketing Strategies, Inc.
("Innovative"), and Homesaver International Inc. ("Homesavers").
Following the voluntary dismissal of the only non-diverse defendant, the
case was timely removed by F & G to this court on January 29, 2001. The
Second Amended Complaint ("SAC") states causes of action against F & G
for breach of contract, breach of the covenant of good faith and fair
dealing, and trade libel/defamation.

The facts underlying the dispute are as follows. On March 27, 1997,
EPIS and F & G entered into a General Agent's Agreement, authorizing EPIS
to sell certain life insurance and annuity products on behalf of F & G.
See Declaration of Tony P. Wilkey ("Wilkey Decl."), Exh. A, General
Agent's Agreement ("GAA"); Separate Statement of Undisputed Material
Facts in Support of F & G's Motion ("F & G's Statement of Facts") ¶
2; Plaintiff EPIS' Separate Statement of Undisputed Facts in Opposition
("EPIS Statement of Facts") ¶ 2. Section 22 of the GAA provides that
the agreement "may be terminated by either party upon 30 days notice in
writing by ordinary mail to the last known address of the other party, or
may be terminated by the Company immediately for cause."*fn1 GAA.
Section 23 of the GAA provides, in pertinent part:

B. Effect on Previous Agreements: The execution of
this Agreement abrogates, terminates, and supersedes
all previous agreements between you and the Company.

C. Amendment of Agreement: This Agreement can only be
amended and modified by a written instrument properly
executed by you and an authorized officer of the
Company. Failure of the Company to take advantage of
any breach of the terms, conditions, or covenants
herein contained shall not constitute a waiver or
estoppel to thereafter enforce any of said terms,
conditions or covenants. This Agreement cannot be
modified by any acquiescence in practices or courses
of dealing by the Company contrary to the terms,
conditions, or covenants thereof.

Id. On March 19, 1999 F & G sent EPIS a letter stating,
in part:

In accordance with the terms of your agreement dated
March 26, 1997 section 22, we are exercising our right
to terminate that agreement.

We ask that you return, to my attention, any and all
marketing, sales, and agent contract information you
may have for F & G Life in addition to any and all
administrative materials you may have in your
possession.

See Wilkey Decl., Exh. C. ("March 19, 1999 Letter"). On April 16, 1999,
in response to an inquiry from EPIS, F & G wrote a second letter to EPIS
providing:

Th[e] letter indicates that EPIS believes that it was
terminated for cause by F & G Life Insurance by letter
dated March 19, 1999. Please be advised that the
termination exercised under Section 22 of the producer
agreement was a notice termination and not a
termination for cause.

We trust this clarification resolves the issues raised
in your letter. If I can be of further assistance
please feel free to contact me directly.

See Wilkey Decl., Exh. D ("April 16, 1999 Letter"). On April 22, 1999, F
& G sent a third letter to EPIS regarding the exercise of termination
under Section 22 of the GAA. That letter states in part:

Your letter of April 21, 1999 raises questions
regarding the EPIS termination and the reason for the
termination. As to the actual termination, F & G Life
Insurance Company notified EPIS by letter dated March
19, 1999 that it was terminating the producer
agreement between it and EPIS. Section 22 of that
agreement allows for termination by either party upon
thirty (30) days notice or termination for cause based
upon certain enumerated provisions. F & G Life did not
terminate the agreement for cause and did not rely on
one of the provisions set forth in Section 22 defining
"cause." Instead, F & G Life provided a written notice
to EPIS indicating termination of the agreement (a
"notice termination") as Section 22 provides.

Your second query concerns the reason for the
termination and I would direct EPIS to Mr. McDaniel or
Mr. Abate for that discussion. I point out that no
reason is required for F & G Life to terminate its
relationship with EPIS upon proper notice. EPIS
enjoyed the same right to disassociate itself in the
same manner while the agreement was in force and
again, no reason would have been required.

See Wilkey Decl., Exh. E ("April 22, 1999 Letter").

EPIS alleges that F & G breached the GAA by terminating the agreement
despite the "custom and practice, Federal Regulations, and implied and
express duties of good faith and fair dealing" which were incorporated
into the GAA, and, which prevented F & G from arbitrarily terminating the
GAA without good cause and without notice or opportunity to correct any
claimed breaches, defaults or nominal violations. SAC ¶¶ 30, 39. EPIS
also argues that F & G's obligation of good faith and fair dealing
included the implied covenant that F & G would not arbitrarily terminate
the GAA under Section 22 or any other section of the GAA. SAC ¶ 50.
The implied covenant of good faith and fair dealing, coupled with the
terms, conditions and purposes of the GAA, also impliedly limited F & G's
ability to terminate the GAA upon 30 days notice. Id. Finally, EPIS
contends that F & G defamed EPIS. SAC ¶ 66.

Currently before the Court is F & G's motion for summary judgment, F &
G's objections to evidence submitted by plaintiff in opposition to F &
G's motion for summary judgment, and EPIS' motion to amend the Second
Amended Complaint.

LEGAL STANDARD

I. Motion for Summary Judgment

Summary judgment is proper "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." Fed.
R.Civ.P. 56(c). The moving party bears the initial burden of
demonstrating the
absence of a genuine issue of material fact. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
The moving party, however, has no burden to negate or disprove matters on
which the non-moving party will have the burden of proof at trial. The
moving party need only point out to the Court that there is an absence of
evidence to support the non-moving party's case. See id. at 325, 106
S.Ct. at 2554.

The burden then shifts to the non-moving party to "designate `specific
facts showing that there is a genuine issue for trial.'" Id. at 324, 106
S.Ct. at 2553 (quoting Fed.R.Civ.P. 56(e)). To carry this burden, the
non-moving party must "do more than simply show that there is some
metaphysical doubt as to the material facts." Matsushita Electric
industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct.
1348, 1356, 89 L.Ed.2d 538(1986). "The mere existence of a scintilla of
evidence . . . will be insufficient; there must be evidence on which the
jury could reasonably find for the [non-moving party]." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2519, 91 L.Ed.2d
202(1986).

In deciding a motion for summary judgment, the evidence is viewed in
the light most favorable to the non-moving party, and all justifiable
inferences are to be drawn in its favor. Id. at 255, 106 S.Ct. at 2513.
"Credibility determinations, the weighing of the evidence, and the
drawing of legitimate inferences from the facts are jury functions, not
those of a judge [when she] is ruling on a motion for summary judgment."
Id.

II. Motion to Amend

Federal Rule of Civil Procedure 15 governs the amendment of
complaints. It states that if a responsive pleading has already been
filed, the party seeking amendment "may amend the party's pleading only
by leave of court or by written consent of the adverse party. Leave shall
be freely given when justice so requires." Fed.R.Civ.P. 15(a). This rule
reflects an underlying policy that disputes should be determined on their
merits, and not on the technicalities of pleading rules. See Foman v.
Davis, 371 U.S. 178, 181-82, 83 S.Ct. 227, 230, 9 L.Ed.2d 222(1962).
Accordingly, the Court must be very generous in granting leave to amend a
complaint. Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079
(9th Cir. 1990). The Court may deny amendment under Rule 15(a) "when
amendment would be clearly frivolous, unduly prejudicial, cause undue
delay or a finding of bad faith is made." United Union of Roofers v.
Ins. Co. of America, 919 F.2d 1398, 1402 (9th Cir. 1990). A Court may
also deny amendment if that amendment would be futile, or if there have
been previous unsuccessful attempts to cure deficiencies. See Foman, 371
U.S. at 182, 83 S.Ct. at 230. The Court has the discretion to determine
whether the presence of any of these elements justifies refusal of a
request to amend the complaint; this discretion is particularly broad
where plaintiff has previously amended the complaint. Ascon Properties,
Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989).

F & G has filed objections to substantial portions of the evidence
submitted by plaintiff in connection with the opposition to F & G's
motion for summary judgment. The ...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.